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Seller failed to fix septic system that failed inspection after buyer closed on the home. How do you force seller to fix the problem.

By Ilyce Glink and Samuel J. Tamkin

Q: I have a friend who purchased a home in 2019. He bought the home even though the home inspection found the property had a bad septic system.

Are the sellers responsible to fix/replace it? How long do they have to do so? The sellers said they would fix the septic system, but they have been avoiding my friend’s real estate agent. He figured they weren’t going to fix it and hasn’t heard from them since the closing.

Now it’s the middle of 2021, and he is wondering if there’s something else he could have done to make the sellers live up to their agreement to fix the septic system. Is there something he can still do now or is it too late?

Inspector discovered problems with septic system

A: Thanks for your question. We’re sorry the seller failed to fix septic system of your friend’s home. They failed to live up to their side of the bargain and fix the home’s septic system. You’ve asked what your friend should have done. We have some suggestions on what your friend should have done. Some of these suggestions we’ve shared with our readers over the years.

First, let’s start by acknowledging that septic system repairs can be awfully expensive. Many homeowners purchase homes without septic systems and may not understand what they are and why they are so expensive to maintain, repair and replace.

Usually, homeowners living in urban and suburban areas have plumbing systems tied to the local municipal water and sewer systems. In other words, you turn on a tap or flush a toilet, the local water and sewer systems handle the rest. With homes tied to local water and sewer systems, there’s no need for a well or septic system to handle water and waste.

In other parts of the country, homes get their water from water wells and dispose of or recycle used water in septic systems. While there are different types of septic systems, they all capture waste water and dispose of that waste water in septic tanks or septic fields. The waste water doesn’t end up in a municipal water treatment plant, but is treated on the property, usually fairly close to the home.

Buyer needs a guaranty that a seller will fix the septic system after closing

From your email, we gather that your friend’s home inspector took a look at the septic system and found it either wasn’t operating properly or was broken. At that point, your friend should have insisted that the seller fix the system prior to closing. Sometimes, you have to wait for good weather to fix a septic system. If that was the case, your friend should have required the seller to set aside cash in an escrow account to cover the repair or replacement of the septic system.

When the seller failed to fix septic system, either of these options would have allowed your friend a remedy for the seller’s failure to pay for any septic repairs. Your written agreement must allow you to put some of the seller’s money aside to guarantee his performance. You should get an estimate for the cost of repairs. If the estimate is for $1,000, the seller should place $1,500 into the escrow. You should have a cushion in the escrow of 125% or 150% of the estimate. This cushion will make sure the seller has an incentive to get the work done and get any excess money returned.

Clearly, this didn’t happen. Did your friend simply take the sellers’ word that they’d make the septic system repairs? While it would be nice to go on a handshake, there’s a reason closing documents contain provision relating to what a seller must do before and after closing. Now that the seller has failed to make the repairs, your friend needs to figure out how much those repairs will cost. Once he knows the cost, he can decide how to proceed.

Remember: Put it in writing and hold money back.

We’ve had readers write to us to let us know that they spent $15,000 or more on septic system issues. If the costs are high enough, your friend may want to consult with an attorney who can advise him on any legal options that would allow him to pursue a financial remedy from the seller.

The attorney will want to review the documentation that you and the seller signed for the purchase of the home as well as anything that shows the seller’s obligations to pay for the repairs to the septic system. Based on this documentation, the attorney may tell your friend that he can sue the seller but he’ll be on the hook for any attorney fees he spends. He might also find that the contract has a provision that would allow your friend to recover his attorneys fees.

And, finally, he might tell him that the documentation does not support his claim against the seller for the money because the seller never legally obligated himself to pay for the repairs. In this last case, your friend may be out of luck unless the attorney can prove some fraud claim against the seller or prove a case against the seller under a seller disclosure law.